Lina Storm is EVP, Head of Advanced Insurance Solutions, Cetera Financial Group.
There’s a lot going on in your 40s: raising a family, paying a mortgage, shuttling kids to and from activities, caring for elders—all while working. It’s easy to put off financial priorities for the family and to lose sleep over it at the same time.
Here are four simple and effective ways to prioritize planning in your 40s, keep your family protected and improve your nightly zzz’s along the way.
1. Secure insurance as the foundation of a financial plan.
Life Insurance
It is easy to make auto insurance and renters or home insurance a priority because in most states they are legally required and because those transactions are easy to do, even if they are time-consuming.
But what about life insurance? Replacing income for a family that loses a breadwinner in the event of a premature death is critical to the family’s financial survival. At a minimum, a term life insurance policy that pays a death benefit to the family if a breadwinner dies prematurely can be affordably purchased and should be the foundation of any family’s financial plan. Policies can now be purchased online, or through a financial advisor through a bank or investment firm.
Tip 1: A term policy is affordable and easy to secure. The coverage on a term policy ends after a specified number of years. However, by purchasing a term policy that has a convertibility option, the policyowner has a period of time in which to switch the term contract to a permanent one without providing the insurer with evidence of insurability. This way, if one’s health status changes, it will not affect the ability to get life insurance coverage after the term policy ends. A permanent policy is designed to last a lifetime and therefore has higher premiums for a set period of time than term insurance.
A permanent policy also builds cash value and keeps the policy in place throughout the policyholder’s lifetime if it is funded properly. The cash values (made up of the premiums paid plus a growth factor) can be accessed during their lifetime on a tax-advantaged basis in the form of loans or withdrawals, for any reason, generally without penalties. The cash values can be a valuable source of supplemental tax-free income during retirement if the need for life insurance coverage has diminished at that time.
Tip 2: Alternatively, an affordable option is to combine a term policy or feature with a permanent policy so that when the term policy or feature ends, the permanent policy remains.
Tip 3: Consider adding a 7702B long-term care (LTC) rider to a permanent policy in which the death benefit on the policy may be used during the policyholder’s lifetime to cover the LTC costs of the insured. Though long-term care may not be needed for decades, the rider provides flexibility to use the policy’s tax-free death benefit during lifetime to cover LTC needs in the future. The cost of the rider can be subsidized by funds in a health savings account (HSA), as well, provided that the rider cost can be separated out of the total premium.
Disability Income (DI) Insurance
Another foundational tool for a family is to secure DI policy on a breadwinner in which income is replaced by the policy in the event the insured becomes too sick or hurt to work. Group disability policies offered by an employer are limited and taxable. An individual DI policy would coordinate with the group coverage, if any, and the benefits would be tax-free. Annual premiums on a disability income policy are relatively low.
Tip: The definition of disability in a DI policy is a critical feature of the policy and generally is based on a disability that prevents the insured from performing the duties of either their “own occupation” or “any occupation.” Be sure to consider how restrictive the definition is and how that relates to your particular needs. The more restrictive, the lower the premium.
2. Contribute to retirement plans.
Contributing the maximum, or the amount your budget can sustain, to a 401(k) or other employer-sponsored retirement plan is an important part of planning for your financial future. In 2025, the maximum contribution allowable to 401(k), 403(b) and 457 retirement plans is $23,500.
Retirement plan contributions can be made on a pre-tax basis so that contributions are not included in the participant’s federal income tax. This tax deduction can lead to significant household savings, especially if income tax rates increase. In addition, the funds in the retirement plan grow tax-deferred, the compounding effect of which can be significant over time.
3. Pay off debt.
Paying off chunks of student debt with an annual bonus can go a long way in increasing household income. Also making an additional mortgage payment once per year won’t change your monthly mortgage payments but can cut years off a conventional 30-year mortgage. When interest rates drop, refinancing a mortgage can also save household income.
4. Contribute to an HSA account and lower your health insurance premium.
If an employer offers an HSA plan to coordinate with a high deductible health plan (HDHP), it may make sense for an employee to choose the HDHP, which can offer a much lower premium and increase household income. The difference in premium is allocated to the HSA account—up to a limit based on age—on a pre-tax basis (again increasing household income) and those funds can be used to fund any qualifying out-of-pocket copays and deductibles on the HDHP, if needed. The withdrawals for qualifying medical expenses are tax-free.
If funds are not needed in any year, the HSA funds grow tax-deferred and roll over year to year and can be withdrawn anytime tax-free for qualifying medical expenses. A 20% penalty applies to withdrawals made for non-qualifying expenses before age 65. After age 65, no penalty applies, though income taxes do apply on non-qualifying withdrawals. Choosing this option depends on the extent of a family’s need for health and medical services.
The information provided here is not investment, tax or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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